Using the economic theory of Human Capital, describe and explain the theoretical basis for income changes over the life cycle.
In other words, why it is that earnings increase at a decreasing rate, as one ages (why are returns diminishing - as is observed empirically)?© BrainMass Inc. brainmass.com October 24, 2018, 9:15 pm ad1c9bdddf
It has been observed empirically that earnings often increase with age but at a decreasing rate - and both the increasing and decreasing rates are directly related to the level of skill, Becker (1992) notes. Within human capital theory there are several explicative factors. One is simply diminishing marginal productivity: years of experience increases with age - thus the absolute level of productivity may be higher, however the marginal gains in productivity reduces each time period (i.e. each year). Logically, it follows that the absolute increase in experience ...
This solution is a 300-350 word explanation of how human capital relates to (and predicts) diminishing marginal productivity and income. The explanation provides examples and cites the work of Gary Becker (a Nobel prize winning Economist). In addition to providing a traditional human capital theory explanation, the solution's author uses the principles of human capital to offer an additional explanation of empirical (research-based) observations.
Globalization and Trade Economics
1. Professor Charles W.L. Hill says, "As used in this book, globalization refers to the shift toward a more integrated and interdependent world economy. Globalization has two main components: the globalization of markets and the globalization of production."
Without rewording Hill's statement, give your definition of the term Globalization.
2. In his book The Competitive Advantage of Nations, Michael Porter of the Harvard Business School tries to explain why certain nations have international success in selected industries. He does so by looking at four major attributes in a paradigm we now call Porter's Diamond.
In your own words, tell what the four attributes are and then evaluate Porter's Diamond theory.
3. Shortly after World War I, the nations of the world returned to tracking the value of their currencies to the price of gold. This system lasted until the Great Depression era when nations suspended gold convertibility.
Why? And what role did the United States play in all of this?
4. Professor Hill speaks to several international trade theories. We have also addressed this in class. One of these is the Product Life Cycle theory, sometimes called the International Product Life Cycle Theory, or IPLC.
Define the IPLC in your own words and giving two examples of products that fit within this theory
5. Toward the end of World War II, with the world's economic system of trade in ruin, over 40 nations met in the United States at a resort in New Hampshire to create rules and organizations to govern the post-war international monetary system.
What was the name of the "system" that came out of this series of meetings, what were the two multinational institutions that were established, and explain the mission of one of these two organizations.
6. There are both advantages and disadvantages to entering into international business via a certain mode.
Name two different modes of entry and thoroughly discuss the advantages and disadvantages of each, identifying at least one product or service that would go with each of your two modes.